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Indian e-tail: Growth spurts, m-commerce and Alibaba

India is turning into one of the world’s most dynamic e-commerce markets, so it’s perhaps no surprise that Alibaba is planning to get in on the act this year (more of that later). In fact, a new report says the market has been surging but will really take flight in 2016.

Average online purchases should increase by 78% this year on the back of attractive discounts, enhanced loyalty programmes and aggressive marketing, according to Assocham-PwC. The market grew 66% last year, the report said.

And what’s the other factor that will encourage this growth? Yes, you guessed it, mobile. Much of the growth this year and next will come from those continuously-connected devices we carry with us everywhere. Smartphones already account for 11% of e-sales and this figure is set to reach 25% by 2017. That’s one impressive growth story.

The market

India’s overall e-commerce industry is valued at US$25bn at the moment, Assocham (the Associated Chambers of Commerce of India) said, and has been enjoying a CAGR of 35% to 40% annually. It should reach $38bn this year and $100bn within five years.

So what are Indians buying? Clothes, accessories and consumer electronics not only make up a huge chunk of sales but are growing the fastest. They accounted for 35% of turnover last year and that figure should be 40% this year.

With all that in mind, Alibaba’s interest really makes sense. The Chinese e-commerce group’s is already present in India via its stakes in Paytm and Snapdeal but a major entry on its own behalf would be a factor in accelerating both the local market’s growth and its own position as the e-tail giant to beat.

The company’s global MD was in New Delhi last week, speaking to government ministers, who later reported that Alibaba will debut in India this year. Apparently, it’s mulling whether to go it alone or enter the country with a partner.Watch this space.